Many investors are thrilled to see how well US based equities have performed in the last few years.

However, international stocks have been making strong upward movements of their own. With increases as high as 14% within the first five months if this year, investors are asking if they should consider these stocks.

Looking back, international stocks performed quite well preceding 2007. That changed after 2007. Since then, international stock performance has been hit & miss. As of 2016, it appears this trend may have shifted.

Generally, most advisors agree that having some exposure to international stocks is always a good thing… and most agree they should never comprise more than 1/3rd of one’s equity exposure.

Choosing to invest in international stocks has one major advantage – diversification. Yes, certain populist political trends lean toward isolationism. However, the dynamics of a global economy are such that smart investors have at least some exposure to international equities.

Individuals that lack the time or expertise to actively trade securities can still participate via two key methods:

* Dollar cost averaging
* Regular rebalancing

With dollar cost averaging, an investor buys stocks consistently over time. Sometimes they’ll buy when the market is low and sometimes when it is high… and over time they’ll achieve a purchase price that is “averaged” so that it is often better than if they were trying to time the market. If one had been investing consistently since 2007, they would have seen some fantastic growth over time.

With regular rebalancing, you are forced to “sell high” and “buy low”. This means that if one part of your portfolio is performing really well, let’s say U.S. Equities, you would sell some of those stocks. You would use those proceeds to invest in underperforming equities. This follows Warren Buffett’s great advice which is: “Buy the fear and sell the greed”.

You should also ensure your exposure to risk is diversified. For international stocks, this means buying equities from different countries and sectors.

So are international stocks right for your portfolio? We recommend reaching out to your financial advisor to get the best answer to that question. They understand your goals and your situation. They can also help you understand the risks, portfolio allocations, and the best investment vehicles to help you participate in international stocks while limiting risk.